Water Electrolysis Equipment Market, Global Outlook and Forecast 2025-2032

MARKET INSIGHTS

Global water electrolysis equipment market size was valued at USD 1,434 million in 2024. The market is projected to grow from USD 2,490 million in 2025 to USD 29,690 million by 2032, exhibiting a CAGR of 55.5% during the forecast period.

Water electrolysis equipment refers to systems that use electrical energy to split water molecules into hydrogen and oxygen gases through electrochemical reactions. These systems primarily consist of electrolyzers, power supplies, and auxiliary components. The technology is categorized into three main types: alkaline electrolyzers (dominating 55% market share), proton exchange membrane (PEM) electrolyzers, and other emerging technologies. The process plays a critical role in green hydrogen production, energy storage, and industrial gas applications.

The market's exponential growth is driven by global decarbonization efforts and increasing adoption of renewable energy sources. China currently leads the market with 37% share, followed by Europe (31%) and North America (21%). The power-to-gas application segment holds the largest share (38%), while industry leaders like Nel Hydrogen, Siemens, and Plug Power collectively control 46% of the market. Recent developments include capacity expansions by key players and government initiatives supporting green hydrogen infrastructure.

MARKET DYNAMICS

MARKET DRIVERS

Global Push for Green Hydrogen to Accelerate Water Electrolysis Equipment Demand

The water electrolysis equipment market is experiencing unprecedented growth due to the global transition towards green hydrogen production. As countries commit to carbon neutrality targets, investments in electrolyzer technologies have surged significantly. The alkaline electrolyzer segment, currently holding 55% market share, remains the preferred choice for large-scale hydrogen production due to its cost-effectiveness and technological maturity. China leads this transition, accounting for 37% of global installations, followed closely by Europe at 31% - both regions heavily investing in renewable energy integration with hydrogen infrastructure.

Power-to-Gas Applications Driving Market Expansion Across Industries

Power-to-gas applications currently dominate electrolyzer usage with 38% market share, as energy companies seek solutions for renewable energy storage and grid balancing. Major energy players are deploying multi-megawatt electrolyzers to convert excess renewable electricity into hydrogen, creating new revenue streams while addressing intermittency challenges. The chemical industry follows closely, utilizing electrolytic hydrogen for ammonia production and refining processes. With steel manufacturers increasingly adopting hydrogen-based direct reduction technologies, demand for heavy-duty electrolysis equipment is projected to grow at nearly 60% CAGR through 2032.

➤ Notably, recent project announcements indicate over 60GW of electrolyzer capacity in the global pipeline, with Europe and Asia accounting for 76% of planned installations.

Furthermore, government incentives like production tax credits and research grants are driving private sector investment, with major players such as Nel Hydrogen and ThyssenKrupp expanding production capacities to meet anticipated demand.

MARKET RESTRAINTS

High Capital Costs and Energy Intensity Limiting Widespread Adoption

Despite strong growth projections, water electrolysis systems face significant adoption barriers related to upfront costs and operating expenses. Currently, PEM electrolyzers require approximately 30% higher capital investment compared to alkaline systems, creating challenges for budget-constrained projects. Energy consumption remains another critical factor, with electrolysis processes typically requiring 50-55 kWh per kilogram of hydrogen produced - making renewable electricity costs a decisive factor in project economics, especially in regions with limited clean energy infrastructure.

Other Restraints

Supply Chain Vulnerabilities
The industry faces material supply challenges, particularly for critical components like iridium catalysts in PEM systems and specialized membranes. With iridium availability limited to approximately 7 tons annually and existing technologies requiring 1-2 grams per kW capacity, scaling production without material innovation presents a significant hurdle.

Infrastructure Gaps
Hydrogen storage and transportation infrastructure remains underdeveloped in most markets, creating a chicken-and-egg situation where electrolyzer deployment awaits infrastructure development and vice versa. Current pipeline networks can only accommodate about 15% of projected hydrogen demand through 2030.

MARKET CHALLENGES

Technology Scaling and Skilled Labor Shortages Impeding Growth

As the industry scales from megawatt to gigawatt production capacities, significant engineering challenges emerge in maintaining system reliability and efficiency. Alkaline electrolyzers, while proven at smaller scales, face efficiency losses when scaled beyond 20MW single-stack configurations. Modern PEM systems offer better scalability but require more complex balance-of-plant components, increasing maintenance requirements. The industry currently faces a shortage of approximately 20,000 trained technicians and engineers specialized in hydrogen technologies, particularly in emerging markets where infrastructure development is most active.

Regulatory Harmonization Challenge
Differing hydrogen purity standards and safety regulations across regions create compliance complexities for equipment manufacturers. While Europe has established comprehensive standards through CEN/CENELEC, other regions lack unified frameworks, forcing manufacturers to customize systems for different markets. Certification processes can add 6-9 months to project timelines in some jurisdictions, delaying market entry.

MARKET OPPORTUNITIES

Emerging Offshore Hydrogen Production and Industrial Co-Location Present New Growth Frontiers

Offshore wind-to-hydrogen projects represent one of the most promising growth avenues, combining abundant renewable resources with existing gas pipeline infrastructure. Pilot projects in the North Sea demonstrate the technical feasibility of this approach, with electrolyzer capacities projected to reach 200MW per platform by 2027. Meanwhile, industrial co-location strategies are gaining traction, particularly in chemical clusters where hydrogen producers can directly supply neighboring ammonia facilities or refineries, eliminating transportation costs. Such integrated projects currently demonstrate 15-20% better economics compared to standalone systems.

Small-Scale Distributed Systems Emerging
Distributed hydrogen production for refueling stations and industrial applications is creating new market segments. Containerized electrolyzers in the 1-5MW range are experiencing 45% annual growth as businesses seek to decarbonize operations without relying on centralized production. This trend is particularly strong in regions developing hydrogen mobility infrastructure, where refueling stations require reliable, on-site hydrogen generation.

Segment Analysis:

By Type

Alkaline Electrolyzer Segment Dominates Due to Cost-Effectiveness and Commercial Maturity

The market is segmented based on type into:

• PEM Electrolyzer

• Alkaline Electrolyzer

• Solid Oxide Electrolyzer

• Others

By Application

Power to Gas Segment Leads Owing to Growing Renewable Energy Storage Demand

The market is segmented based on application into:

• Power to Gas

• Chemical Industry and Refining

• Metallurgy and Steel Industry

• Hydrogen Refueling Stations

• Others

By Capacity

Large-Scale Systems Gain Traction for Industrial Applications

The market is segmented based on capacity into:

• Small-Scale (<200 kW)

• Medium-Scale (200-1000 kW)

• Large-Scale (>1000 kW)

By End User

Energy Companies Drive Adoption for Green Hydrogen Production

The market is segmented based on end user into:

• Energy Companies

• Chemical Manufacturers

• Industrial Gas Producers

• Research Institutions

• Others

COMPETITIVE LANDSCAPE

Key Industry Players

Strategic Collaborations and Technological Advancements Drive Market Competition

The global Water Electrolysis Equipment Market features a dynamic competitive landscape, characterized by a mix of established multinational corporations and emerging regional players. The industry is currently experiencing rapid expansion, propelled by increasing demand for green hydrogen production and government initiatives supporting clean energy solutions. Nel Hydrogen and Plug Power stand as dominant players, collectively holding a significant market share thanks to their extensive R&D investments and global supply chain capabilities.

Within Asia-Pacific, PERIC Hydrogen Technologies and Longi Green Energy Technology have emerged as key contributors, particularly in China, which holds 37% of the global market share. Their competitive edge stems from cost-efficient alkaline electrolyzer solutions and strong government backing, shaping the regional market dynamics.

The European market sees intense competition among companies like Siemens Energy and ThyssenKrupp, who are pioneering PEM electrolyzer technology development. Recent strategic alliances with energy majors and participation in large-scale hydrogen projects under the EU Green Deal have significantly bolstered their positions.

North American competitors, including Cummins and Teledyne Energy Systems, are responding to this competitive pressure through accelerated product innovation cycles. The ongoing trend toward megawatt-scale electrolyzers has prompted these players to enhance their manufacturing capabilities while improving system efficiencies.

List of Leading Water Electrolysis Equipment Manufacturers

• Nel Hydrogen (Norway)

• Siemens Energy (Germany)

• Plug Power (U.S.)

• PERIC Hydrogen Technologies (China)

• HydrogenPro (Norway)

• Longi Green Energy Technology (China)

• Cockerill Jingli Hydrogen (China)

• ThyssenKrupp (Germany)

• Sunfire (Germany)

• McPhy Energy (France)

• SANY Hydrogen (China)

• Cummins (U.S.)

• CIMC GH2 Technology (China)

• SPIC Hydrogen Technology (China)

• Teledyne Energy Systems (U.S.)

WATER ELECTROLYSIS EQUIPMENT MARKET TRENDS

Renewable Energy Integration Drives Massive Market Expansion

The global push toward renewable energy integration is transforming the water electrolysis equipment market, with green hydrogen production emerging as a critical enabler of decarbonization. Alkaline electrolyzers dominate the market with a 55% share, primarily due to their cost-effectiveness and scalability for large-scale applications. However, proton exchange membrane (PEM) electrolyzers are gaining traction—particularly in Europe and North America—because of their higher efficiency and faster response times. The European Union's REPowerEU plan, targeting 10 million tons of domestic renewable hydrogen production by 2030, exemplifies how policy frameworks accelerate adoption. Meanwhile, innovation in solid oxide electrolyzers promises higher thermal efficiency, particularly for industrial heat applications.

Other Trends

Power-to-Gas Applications Surge Ahead

Power-to-Gas (P2G) currently leads all application segments with a 38% market share, as hydrogen becomes a vital energy storage medium for intermittent renewables. Countries like Germany and China are investing heavily in P2G infrastructure to balance grid demand while reducing reliance on fossil fuels. Notably, China—which controls 37% of the global electrolyzer market—has operationalized multiple gigawatt-scale projects, leveraging its vast renewable energy capacity. Offshore wind farms increasingly incorporate electrolyzers for onsite hydrogen production, eliminating transmission losses and creating maritime hydrogen hubs—a trend particularly visible in the North Sea region.

Industrial Decarbonization Intensifies Demand

Hard-to-abate sectors like steel manufacturing and chemical refining now drive 25% of electrolyzer deployments, spurred by carbon pricing mechanisms and corporate net-zero commitments. The steel industry's shift toward hydrogen-based direct reduction (H2-DRI) requires electrolyzers capable of 80+ MW capacity—a demand met by players like ThyssenKrupp and Siemens. Meanwhile, ammonia producers are retrofitting plants with electrolysis systems to transition from gray to green ammonia, with projects in Saudi Arabia and Australia setting benchmarks. This industrial pivot coincides with tightening emissions regulations—particularly in Europe's Carbon Border Adjustment Mechanism (CBAM) framework—compelling manufacturers to adopt hydrogen alternatives or face steep carbon taxes.

Regional Analysis: Water Electrolysis Equipment Market

North America
The North American water electrolysis equipment market is driven by strong government support for hydrogen infrastructure and clean energy initiatives. The U.S. Inflation Reduction Act (IRA) has injected significant funding into hydrogen projects, with tax credits incentivizing green hydrogen production. Alkaline electrolyzers dominate the market due to their cost-effectiveness for large-scale industrial applications, while PEM technology is gaining traction for its flexibility in renewable energy integration. States like California and Texas are leading adoption through hydrogen refueling stations and power-to-gas projects, though supply chain bottlenecks and high capital costs remain challenges.

Europe
Europe maintains its position as a global leader in electrolyzer deployment, accounting for 31% of market share. The European Commission's REPowerEU plan targets 10 million tons of domestic renewable hydrogen production by 2030, accelerating demand for both PEM and alkaline electrolysis systems. Germany and France lead in technology innovation, with companies like Siemens and ThyssenKrupp advancing megawatt-scale projects. Strict carbon emission regulations under the EU Green Deal are forcing industries like steel and chemicals to adopt green hydrogen solutions. However, reliance on imported components and energy price volatility pose operational risks.

Asia-Pacific
As the largest regional market (37% global share), Asia-Pacific growth stems from China's aggressive renewable hydrogen policies under its 14th Five-Year Plan. China's electrolyzer production capacity surpassed 8 GW in 2024, with alkaline systems dominating due to lower costs. Japan and South Korea are investing heavily in hydrogen infrastructure for mobility and power generation, favoring PEM technology. India shows promise with its National Green Hydrogen Mission but faces hurdles in renewable energy integration. The region benefits from localized supply chains but struggles with inconsistent policy implementation across developing nations.

South America
South America's market remains nascent but holds potential through its renewable energy resources. Chile's National Hydrogen Strategy aims to produce the world's cheapest green hydrogen by 2030, attracting electrolyzer manufacturers. Brazil is exploring hydrogen use in fertilizer production and heavy industries. Economic instability and lack of hydrogen infrastructure slow adoption compared to other regions. While alkaline electrolyzers are preferred for industrial applications, the mining sector shows growing interest in modular PEM systems. Cross-border collaborations with European and Asian firms are emerging to bridge technology gaps.

Middle East & Africa
The Middle East is transitioning to hydrogen as an oil industry supplement, with Saudi Arabia's NEOM project deploying the world's largest 4 GW electrolyzer facility. UAE and Oman are integrating electrolysis with solar power for ammonia production. Africa shows patchy development - Morocco and South Africa lead with pilot projects, while other nations lag due to financing constraints. The region benefits from low renewable energy costs but requires technology transfers to build local expertise. Both alkaline and PEM systems find applications, though project execution faces delays from political and logistical challenges.

Report Scope

This market research report offers a holistic overview of global and regional markets for the forecast period 2025–2032. It presents accurate and actionable insights based on a blend of primary and secondary research.

Key Coverage Areas:

• ✅ Market Overview

  • Global and regional market size (historical & forecast)

  • Growth trends and value/volume projections

• ✅ Segmentation Analysis

  • By product type or category

  • By application or usage area

  • By end-user industry

  • By distribution channel (if applicable)

• ✅ Regional Insights

  • North America, Europe, Asia-Pacific, Latin America, Middle East & Africa

  • Country-level data for key markets

• ✅ Competitive Landscape

  • Company profiles and market share analysis

  • Key strategies: M&A, partnerships, expansions

  • Product portfolio and pricing strategies

• ✅ Technology & Innovation

  • Emerging technologies and R&D trends

  • Automation, digitalization, sustainability initiatives

  • Impact of AI, IoT, or other disruptors (where applicable)

• ✅ Market Dynamics

  • Key drivers supporting market growth

  • Restraints and potential risk factors

  • Supply chain trends and challenges

• ✅ Opportunities & Recommendations

  • High-growth segments

  • Investment hotspots

  • Strategic suggestions for stakeholders

• ✅ Stakeholder Insights

  • Target audience includes manufacturers, suppliers, distributors, investors, regulators, and policymakers

FREQUENTLY ASKED QUESTIONS:

What is the current market size of Global Water Electrolysis Equipment Market?

-> The Global Water Electrolysis Equipment market was valued at USD 1,434 million in 2024 and is projected to reach USD 29,690 million by 2032 at a CAGR of 55.5% during the forecast period.

Which key companies operate in Global Water Electrolysis Equipment Market?

-> Key players include Nel Hydrogen, Siemens, Plug Power, PERIC Hydrogen Technologies, Hydrogen Pro, ThyssenKrupp, Cummins, and McPhy, among others. The top five players hold about 46% market share.

What are the key growth drivers?

-> Key growth drivers include rising demand for green hydrogen, government policies supporting clean energy, and increasing adoption in power-to-gas applications which holds 38% market share.

Which region dominates the market?

-> China is the largest market with 37% share, followed by Europe (31%) and North America (21%). Asia-Pacific shows highest growth potential.

What are the emerging trends?

-> Emerging trends include advancements in PEM electrolyzers, integration with renewable energy sources, and modular electrolyzer systems. Alkaline electrolyzers currently dominate with 55% market share.